Acronyms and abbreviations are useful shortcuts that can greatly increase the readability of text. If you write a thesis about the Capital Asset Pricing Model, you will use this term over and over again. Using an acronym such as CAPM may make it easier for the reader. The proper way to use an acronym is to introduce it by putting it in brackets after the first use of the term in the main text. For instance:
The Capital Asset Pricing Model (CAPM) was developed by Sharpe (1964), Lintner (1965) and Mossin (1966). The CAPM has attracted a lot of attention because ………
However, if used inappropriately, accronyms and abbreviations can have the opposite effect too. This happens in particular when you use too many or unusual abbreviations. For instance,
In calculating the ITP it is necessary to use the IRR or the ICC in measuring the profitability of the FMC.
(In calculating the internal transfer price, it is necessary to use the internal rate of return or the internal cost of capital in measuring the profitabiliy of the fund management company.
Auke Plantinga 